November 8, 2013
Reiss on Risk Management
Law360.com interviewed me in Banks Caught In Middle Of Regulators’ Fair-Lending Pursuits (behind a paywall). The article reads in part,
Federal and state regulators are increasingly enlisting banks in their pursuit of fair-lending and other violations at payday and auto lenders and other financial services providers with which they do business, a tactic that has also increased banks’ risk of penalties for conduct by third parties.
In late October, the Office of the Comptroller of the Currency was the latest to put out new guidance for banks’ responsibility to monitor the activities of third-party vendors that perform operations on behalf of the bank. Other federal and state regulators have been calling on banks with growing frequency and force in recent years in order to ensure their vendors and clients comply with fair lending and other laws.
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The increased use of pressure on banks to indirectly go after firms that may not be subject to federal or state laws or regulations comes after banks outsourced a great deal of their mortgage-lending operations and other services during the financial crisis, according to David Reiss, a professor at Brooklyn Law School.
While many of those vendors met high standards, others, particularly in the subprime loan context, did not. And banks didn’t monitor those failings, Reiss said.
“The crazy thing about that is you’d think banks would do this on their own,” Reiss said. “Why do they need their regulators to say, ‘Check on these things’?”
November 8, 2013 | Permalink | No Comments
BAC Not Required to Evidence Holding Note in Texas Fourth Court of Appeals
In Lowery v. Bank of America, N.A., 2013 Tex. App. LEXIS 13114 (Tex. App. San Antonio Oct. 23, 2013), the Texas Fourth Court of Appeals affirms summary judgment for BAC Home Loan Servicing, LP dismissing homeowner’s claim that without evidence of holding the note, BAC lacked standing to foreclose. The homeowner sought an injunction from the nonjudicial foreclosure initiated by BAC in 2011, alleging wrongful foreclosure as the note did not name BAC or MERS, and further alleging that MERS improperly assigned the note to BAC. The court cites the Reinagel holding that the assignment of mortgage presumptively assigns the note as well, and that BAC is not required to show evidence of holding the note. On these grounds, the court found the homeowner produced less than a scintilla of evidence to show BAC lacked authority to foreclose, and further failed to show the signatory at MERS lacked authority.
November 8, 2013 | Permalink | No Comments
November 7, 2013
Eastern District of California Court Dismisses Plaintiff’s Claims of Federal Statutory Violations, Unlawful Foreclosure, Fraud, Equitable Estoppel & Accounting
The United States District Court for the Eastern District of California in deciding Herrejon v. Ocwen Loan Servicing, LLC, 2013 U.S. Dist. LEXIS 157126 (E.D. Cal. Nov. 1, 2013) dismissed the plaintiff’s complaint as it failed to allege cognizable claims. The plaintiff’s complaint purported to allege claims for federal statutory violations, unlawful foreclosure, fraud, equitable estoppel and accounting.
The plaintiffs (Ricardo G. Herrejon and Rosa E. Navarro-Herrejon) filed this action, which challenged the foreclosure of their property. The plaintiffs also sought to enjoin a November 4, 2013 property foreclosure sale. Plaintiffs’ complaint accused defendants of “unlawful foreclosure.” However, the court dismissed the plaintiff’s action in the absence of viable claims, the court also denied plaintiffs’ requested injunctive relief, and entered judgment on dismissal of plaintiffs’ claims.
November 7, 2013 | Permalink | No Comments
Central District of California Court Finds Plaintiff Lacks Standing as There Was No “Injury in Fact”
The United States District Court for the Central District of California in deciding Ellis v. Bank of Am., N.A., 2013 U.S. Dist. LEXIS 157173 (C.D. Cal. Oct. 28, 2013) concluded that plaintiff did not have standing to challenge defendants’ initiating foreclosure proceedings.
Plaintiff brought a complaint with a litany of claims. The claims included (1) dissemination of false advertising pursuant to 15 U.S.C. § 52; (2) violation of the Fair Debt Collection Practices Act (“FDCPA“), 15 U.S.C. § 1692 et seq.; (3) violation of the Real Estate Settlement Procedures Act (“RESPA“), [2] 12 U.S.C. § 2601 et seq.; (4) violation of California Civil Code §§ 2923.5 et seq., 2924 et seq., 2932.5, and 1095; (5) violation of California’s Unfair Competition Law (“UCL”), Cal. Bus. & Prof. Code § 17200 et seq.; (6) false advertising pursuant to Cal. Bus. & Prof. Code § 17500; and (7) Quiet Title.
On September 12, 2013, MERS filed a motion to dismiss. The court, as an initial matter, noted that plaintiff failed to explain how she had been injured by defendants’ conduct. The court also noted that the previous foreclosures were rescinded, and plaintiff did not allege a pending foreclosure proceeding. Thus, to have standing to bring her claims, the court noted, “the plaintiff must have suffered an ‘injury in fact.'” Accordingly, the court dismissed the plaintiff’s claims granting the defendant’s motion.
November 7, 2013 | Permalink | No Comments
Michigan Court Concludes that the Servicer of the Loan Was Not in Violation of the Notice or Loan-Modification Requirements of Michigan’s Foreclosure-by-Advertisement Statute
The Michigan court in deciding the home mortgage foreclosure case of Pettey v. CitiMortgage, Inc., 2013 U.S. App. LEXIS 22299, 2013 FED App. 0936N (6th Cir.), 2013 WL 5832535 (6th Cir. Mich. 2013), concluded that the servicer of the loan was not in violation of the notice or loan-modification requirements of Michigan’s foreclosure-by-advertisement statute, Mich. Comp. Laws § 600.3204, because the mortgagors failed to take action under the statute that would have triggered the servicer’s notice and loan-modification obligations.
In doing so, the court affirmed the district court’s rejection of the mortgagors’ unjust-enrichment and deceptive acts and unfair practices claims. Moreover, the court was persuaded that the district court’s grant of the servicer’s motion to dismiss and denial of the mortgagors’ motion for reconsideration were proper. The court relied on the reasoning handed down by the lower court in their opinion, with the caveat that defects or irregularities in a foreclosure proceeding resulted in a foreclosure that was voidable, not void ab initio.
November 7, 2013 | Permalink | No Comments
Eastern District of California Finds That MERS Was Not Required to Register to do Business in California
The Eastern District of California in deciding Bogdan v. Countrywide Home Loans, CIV-F-09-1055 AWI SMS (E.D. Cal. 2010), found that MERS was not required to register to do business in California. Based off of this finding the court subsequently dismissed fraud and unfair competition claims against MERS.
Plaintiff brought a litany of claims; (1) violation of Truth-in-Lending Act (“TILA”) against Decision One; (2) violation of California’s Rosenthal Fair Debt Collection Practices Act (“RFDCPA”) against Countrywide, Select Portfolio, Decision One, and Recontrust; (3) negligence against all Defendants; (4) violation of Real Estate Settlement Procedures Act (“RESPA”) against Countrywide, Select Portfolio, and Decision One; (5) breach of fiduciary duty against Morales, Home Sweet, Decision One, and Roman; (6) fraud against all Defendants; (7) violation of California’s Business & Professions Code § 17200 (“UCL”) against all Defendants ; (8) breach of contract agains Countrywide and Decision One; (9) breach of implied covenant of good faith and fair dealing against Countrywide and Decision One; and (10) wrongful foreclosure against Countrywide, Select Portfolio, and Recontrust.
Upon review the court reviewed the claims and subsequently dismissed them, finding that MERS was not required to
November 7, 2013 | Permalink | No Comments
Washington Court Dismisses Plaintiff’s Truth in Lending Act (TILA) Complaint
By Ebube Okoli
The court in deciding Pruss v. Bank of Am. Na, 2013 U.S. Dist. LEXIS 157286 (W.D. Wash. Nov. 1, 2013) found that the plaintiff’s claims were barred by time and or otherwise inadequately pleaded. Therefore, the court granted the defendants’ motion to dismiss.
Pruss, the plaintiff, alleged he had been injured financially by unfair and deceptive lending practices, and brought a complaint with five causes of action. The 5 causes included: (1) predatory lending; (2) violations of the Truth in Lending Act (“TILA”) and the Real Estate Settlement Procedures Act (“RESPA”); (3) slander of title; (4) breach of duty; and (5) Consumer Protection Act violations. Defendants subsequently filed a motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6), which the court granted.
In regards to the plaintiff’s predatory lending claim, the court noted that the plaintiff failed to present any case law or Washington state statute recognizing a claim for “predatory lending.” Further, because all of plaintiff’s other claims were time-barred or were deemed by the court as failing to state a claim, the court granted the defendants’ motion, thus dismissing the plaintiff’s claims.
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November 7, 2013 | Permalink | No Comments